WASHINGTON — The Federal Trade Commission has filed suit in federal court in an attempt to block a deal in which a manufacturer of a brand-name testosterone-replacement drug paid three competitors to delay rolling out cheaper generic versions.
The FTC said the "pay-for-delay" agreement violates antitrust laws, robs consumers of less-expensive alternatives and allows the brand-name drugmaker an unfair monopoly. The complaint was filed last week in U.S. District Court in the Central District of California.
FTC officials are hoping the case will ultimately reach the U.S. Supreme Court. "We want to stop these unconscionable pay-for-delay deals that force consumers to overpay for much-needed drugs," said Jon Leibowitz, an FTC commissioner.
Androgel is a synthetic testosterone gel prescribed to men who have low levels of the hormone due to aging, cancer or HIV/AIDS, among other conditions. Solvay Pharmaceuticals was granted a 17-year patent for Androgel in 2003, and it has become the drug company's second-highest grossing drug, earning about $400 million in annual sales.
Several other drugmakers — Watson Pharmaceuticals, Par Pharmaceuticals and Paddock Laboratories — applied to manufacture a generic version of Androgel and challenged Solvay's patent, saying they could produce a version of the drug that did not impinge on the patent. When the U.S. Food and Drug Administration granted approval, Solvay made a deal with the would-be competitors: They would get a share of Solvay's profits in return for not marketing a generic version until 2010, the FTC complaint said.
Known as "reverse payments," the deals have become increasingly common. The FTC found that nearly half of all settlements between generic drugmakers and brand-name manufacturers in fiscal 2006 and 2007 resulted in some kind of payment to the generic maker in exchange for staying out of the marketplace.
Generic manufacturers pose a significant threat to brand-name drugmakers because they can price their versions of drugs as much as 90 percent lower.